The chief executive of Mulberry has pledged to turn the company from a "UK success story into a global luxury brand" despite a 28pc fall in annual pre-tax profits and the departure of creative director Emma Hill.

BY Graham Ruddick |
13 June 2013

Photo: Vladimir Potop

Bruno Guillon said that Mulberry had undergone a "year of consolidation" after a slowdown in sales and two profit warnings.

The luxury handbag maker has grown rapidly over the last few years thanks to the global success of the Alexa handbag. However, demand for the Alexa is slowing and Mulberry is also battling a cooling of luxury markets, particularly in China.

In the year to March 31, Mulberry said that pre-tax profits fell from £36m to £26m, as revenues fell slightly from £168.5m to £165.1m.

Mr Guillon, who joined the business last year from Hermes, said: "After three years of rapid growth, we have had a year of consolidation during which we have laid the foundations for the transition of Mulberry from a UK success story into a global luxury brand. In particular we are increasing UK production and enhancing both our retail experience and product range.

"Mulberry has a well-established business in the UK and a growing presence in Europe. With over 80pc of our sales derived from these markets where the economic climate remains difficult, Mulberry's challenge for the future is to accelerate our brand awareness in the USA and Asia.

"Greater visibility in Asia will allow us to benefit from tourist traffic in Europe and the USA at the same time as growing our business locally."

Shares in Mulberry have slid this week ahead of the results after the company confirmed the shock departure of Ms Hill on Monday.

Ms Hill will depart Mulberry after more than five years as its lead designer, during which time the share price has increased tenfold and the company has become established as a global luxury brand.

Sources in the fashion world said that Ms Hill has clashed with Mulberry management over the creative and operational direction of the company as it seeks to expand abroad.

Since the end of the financial year, Mulberry said that like-for-like sales have risen 6pc for the 10 weeks to June 8. This is the same rate of like-for-like growth recorded by Mulberry during the year.

The company has just opened new stores in Berlin and Vienna. It is planning to open between 15 and 20 overseas stores each year.

"The outlook for both the retail and wholesale businesses for the year to 31 March 2014 remains challenging given Mulberry's heavy reliance upon the UK and European markets where the economic climate continues to be difficult," Mr Guillon said.

"The trading conditions in Mulberry's more developed domestic market highlight the importance of our international growth strategy.

"We continue to take the necessary steps to build our businesses in the USA and Asia, opening stores in prime retail locations and investing in marketing initiatives that highlight the brand's heritage and craftsmanship.

"The Asian customer is important globally as tourism continues to be a critical component of luxury sales, and we are particularly focused on raising our brand awareness in this market."